With Audience Fragmentation, Broadcast Networks Are in a Bad Place at the Wrong Time — Right Before Upfronts

The broadcast networks are in a tough spot just before the annual upfront ad-selling season begins, reports the New York Post, with much of the problem summed up as audience fragmentation.

“The rapid rise of time-shifted viewing — driven by DVRs, video-on-demand options and mobile devices — decimated TV ratings in the first quarter and threatens to drag down the annual ad-sales season that swings into high gear in just a couple of weeks,” the article reports.

It adds: “Total prime-time commercial ratings fell 8% across the board, marking the sixth straight quarter of total TV declines — and the steepest drop since the third quarter of 2009, according to Nomura analyst Michael Nathanson.”

Without the Super Bowl last year, NBC’s was down 40%, while Fox declined 19%. ABC slipped 6.2% and CBS was helped by Super Sunday, giving it an 8% gain, the story notes.

"The first-quarter broadcast ratings, under any metric, were ugly,” Nathanson wrote in a a report.

Cable networks were also down, with an across-the-board decline of 3% in prime time among adults 18-49, the story says.

With audience fragmentation, Nielsen has struggled to catch up to the ways people are now watching TV, such as Xbox, Netflix and DVRs, the story says.

“The steep drop couldn’t come at a worse time for the TV business, as it heads into its annual ‘upfront’ negotiations with billions of ad dollars at stake,” the Post reports. “Nathanson predicts a shift of ad dollars to cable, given broadcast’s especially weak hand. Cable booked $9.8 billion in upfront ad dollars last year, a 5% gain. Broadcast took in around $9.3 billion.”

Nathanson adds: “The world has become more complicated, and behavior is changing. The DVR is in 47% of households.”

The Post article notes: “Right now the networks are paid by advertisers based on how many viewers watch the commercials in their shows over the first three days after a show is aired, known as ‘C3.’ But there has been a push to extend that to C7, or 7 days, allowing the networks to capture more delayed viewing.”

Netflix is cited as one indication of fragmentation.

“Just weeks ago, Netflix CEO Reed Hastings boasted that his service streamed 4 billion hours of content in the first quarter,” the Post notes. “That figure puts Netflix on par with a large cable network, according to BTIG analyst Rich Greenfield.”

Said Gary Carr, head of broadcast buying at TargetCast: “There is no question audiences are fragmented, but people are spending just as much time with TV.”

The Post adds: “In September, Nielsen will change the definition of a TV household to include homes that watch streaming video via a gaming console, for instance. Currently it counts only those watching on a TV set. The definition, however, won’t extend to mobile viewing on tablets.”

One Comment

OK, so the revenue stream is in a state of adjustment.
But viewership across all the forms small and large continues to grow.
So jump in the ever evolving media stream and know that content will forever be wanted…and good content will flourish.
Peter Bright